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23 January 2019

Globalization presses on despite trends to the contrary

In American business there is plenty of concern about President Trump’s world renowned battles with China, but many businesses are also thinking about protecting their share of other international markets. In 2016, when Trump became President elect, an era of protectionist politics began that threatened globalization. But, since then the rest of the world seems to have decided that globalization isn’t bad after all, which means the U.S. is playing trade catch-up.

A deal is being struck between the EU and Japan that will give both sides preferential access to the producers of cars, and to each other’s markets. This is a fast follow to another EU deal with Canada that has already been made, and talks with Mexico, Australia, New Zealand, among others. The EU is not alone in these moves of increased globalizaton. China is pursuing its own agreements with the Southeast Asian countries, India, Australia, Japan, and South Korea. And, Africa’s economies are working on a new trade pact that could cover the entire continent. A true sign that globalization could be a driving force behind the growth of emerging financial markets.

President Trump seems to think that trading partners have taken advantage of the U.S. over many years and that he can do better with small, individual agreements. He claims he’s winning the trade war with China, and his talks with Japan and the EU are also due to start this year. But there are many signs that Trump’s work in some cases wins only benefits that his country’s citizens and businesses thought he’d already achieved through previous talks. Agriculture is an area of contention between the U.S. and both Canada and Mexico, as a result of Trump’s aluminium tariffs, which remain in place. With his threat to impose imported car tariffs too, he is likely to have difficulty with the EU and Japan.

Many who supported the president in 2016 are yet to feel a positive impact from his trade policies. Many remain supportive, but at the end of the day Trump’s trade fights leave the US on the back foot with the EU, Japan, and other financial centres that protect the trade deals that bring benefit to their farmers and businesses. As many economists, political scientists and investment experts would tell Mr Trump, globalization looks to be the force that will support a thriving world economy in the future.

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